Benefit of South Africa's gold eroding

Slump: Black miners are bearing the brunt of the industry's decline.

STILFONTEIN, South Africa - For decades, this country's gold mines represented both the worst and the best option for black laborers across southern Africa.

The worst because of the dangers of underground mining and the social costs of living apart from families. The best because gold mining meant steady work at relatively high pay for anyone with a strong back.

More and more, though, there is no option at all.

South Africa's gold mining industry is cutting thousands of jobs because of three factors that seem beyond the country's control: rising costs of steel and other supplies; a strong local currency that batters exports; and the diminishing quality of ore hidden ever deeper in the earth.

The changes are hitting an industry that has been central to the black experience here. In the early 20th century, mining helped set the stage for apartheid by building demand for cheap labor; in the 1980s and 1990s it helped speed the spread of HIV and AIDS by warehousing male black workers far from wives but close to prostitutes.

Yet gold mining also provided jobs that were the only source of income for thousands upon thousands of households.

Gold production fell last year to the lowest level since 1931, the trade group known as the Chamber of Mines announced last week. The industry that contributed more than any other to the wealth of South Africa now accounts for barely 2 percent of the country's economy, down from 10 percent in the mid-1980s.

Once accounting for three-quarters of the world's production of gold, South Africa now provides 15 percent.

The impact is felt most acutely by miners, many of them migrants from poorer countries in southern Africa. Since the early 1980s, the number of jobs in the gold mines has dropped by more than half, to fewer than 200,000 from more than 500,000.

The decline is likely to continue. Ten mines that employ 90,000 workers and account for half of the country's remaining gold production are marginal or losing money, according to Roger Baxter, the Chamber of Mines' chief economist.

About 6,500 more jobs could be eliminated soon in the country's North West province, where mining company Durban Roodepoort Deep sold money-losing shafts last month to a liquidator. Mining has been suspended there as the liquidator weighs giving the mine another shot, finding a new buyer or selling off the assets.

"I'm scared to lose my job," said Albert Aenggizana, a 41-year-old machine operator who until last month operated jaw-rattling machinery that frees gold-bearing ore from other rock two miles under the surface of the earth.

"If I lose my job, I can't survive, can't feed my family," he said. "Honestly, if I leave here, I will no longer work. No one will hire me."

Aenggizana lives with other miners in a dormitory-style hostel. Like most others, he sends the bulk of his $430 monthly wage to family members, including a wife and five children, hundreds of miles away.

"I don't like this job; I'm just doing it for my family," he said without bitterness.

Even with unemployment estimated at 40 percent nationally, Aenggizana took it for granted that he could find a mining job.

"But now," he said, awaiting word of his fate, "it's like there are no jobs for anyone. I never thought of this."

Until fairly recently, few people did.

Gold occupies a central place in South Africa's history and identity. In 1886 prospectors discovered gold at present-day Johannesburg, stumbling across the planet's richest known vein of the metal. Today the province is called Gauteng, a Sesotho word meaning "place of gold."

Mining required capital, which is why the industry turned to Europe and, later, the United States for investment. It also required inexpensive labor. Mine companies and the government solved that problem in the 1890s by exploiting black Africans.

A hut tax payable only in cash was imposed to force blacks from subsistence farming or herding into the mines. The tactic, also used to help diamond mines, succeeded because mine work was the only possible source of cash. And to avoid competing with one another for labor, mining firms agreed to cap wages artificially low.

For decades, the country's gold production rose more or less steadily on the backs of these workers: from 234 metric tons in 1910 to 436 tons in 1940, to 1,000 tons in 1970, the high point.

The industry has declined gradually since then. By 2000, output had fallen to 428 tons and the work force to 225,000. The drop-off has accelerated in recent years, in part because of a shift to gold fields in Australia and the United States.

Not only is the remaining ore of ever-lower quality, but also the cost of reaching it has risen because of a spike in the price of water, steel and labor. Emboldened during a brief upturn five years ago, mining companies rewarded workers with above-inflation raises. The move reflected the growing power of unions, especially the National Union of Mineworkers, founded in 1982 to represent black workers.